As with any licensed driver, a teenager must have insurance to drive in almost all 50 states. While car insurance for a teen driver costs significantly more than for adults, neglecting to secure coverage can result in hefty fines for uninsured driving and a total loss of potential reimbursement for vehicular damage and medical bills following an accident.
While most parents add their children to their car insurance to take advantage of multi-driver discounts, this will still result in significantly higher premiums. Even so, insurers tend to charge more for separate policies – if they will issue them at all – since most teen drivers have a higher statistical likelihood of causing an accident.
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Understanding Teen Driver Insurance Options
Before shopping for car insurance for your teen driver, consider the pros and cons of bundling coverage or purchasing individual policies.
Adding a Teen Driver To Your Policy
Teen drivers are not automatically covered under their parent’s coverage, even if they live in the same household and drive the same car. However, parents can easily add their children to their insurance policy by contacting their insurer or submitting a request online. At the bare minimum, ensure you purchase your state’s required liability limit to protect your children and their passengers following an accident.
Teenagers can start driving as minors in most states, meaning that many lack applicable road experience, may frequently give rides to friends and classmates, can get easily distracted, and possess minimal credit history. Because of these and other factors, many insurers will not even allow them to purchase individual coverage.
Pros and Cons
While adding your teenage children to your family auto insurance plan can offer many benefits, it does present certain disadvantages:
Pros | Cons |
|---|---|
Often easier than taking out a new policy | Their driving record can affect your rates |
It will likely cost less than a separate policy | It may not encourage financial independence |
Tends to offer student/good driver discounts | Lack of incentive for students to assist with managing coverage |
Particularly convenient for families with multiple children | Not as customizable as a separate policy |
How To Do It
- Do your research. Always shop around and compare insurance companies to see if you can find more affordable or better-suited coverage elsewhere. Likewise, whether or not you plan on keeping your existing policy, ask your insurer how a teen driver could affect your rates.
- Request a formal quote. Ask your preferred insurance provider about the official cost of including a teen on your policy. Many insurers offer teen driver and good student discounts to help lower final premium costs.
- Add your teenager to start coverage. Most insurers will allow you to add or drop drivers from your policy online or over the phone.
Getting a Separate Policy
Once they start driving, some teenagers may decide they want to purchase individual coverage. In an ideal situation, these individuals would have at least 6 months of safe driving and good credit in their favor. However, this rarely proves the case. Generally speaking, most teenagers lack the financial independence, experience, and organizational skills necessary to manage this expense.
Likewise, parents might prefer their children to purchase auto insurance independently. Parents who previously insured teen drivers on a family plan may want to exclude them if they no longer share vehicles or plan to switch to a separate plan. Since all insurers view teenagers as high-risk drivers, they universally charge more for individual coverage and limit available benefits.
Pros and Cons
While teenagers who purchase car insurance independently from their parents face unique financial barriers and limited accessibility, doing so occasionally provides minor benefits:
Pros | Cons |
|---|---|
Protects parents from premium increases caused by their teenager’s accidents and driving habits | It requires more effort and paperwork to set up |
It gives teenagers real-world experience and knowledge of how insurance works | Insurers do not always allow teenagers to purchase independent policies |
Enables teens to build good credit and financial independence | Teens may not qualify for a separate policy if they are under their state’s legal age of consent |
Incentivizes healthy driving habits | Teens cannot benefit from their parents’ individual discounts and safe driving rewards |
How To Do It
- Shop around. Depending on your state and children’s age, they may find some companies willing to insure them independently. Encourage your teen to thoroughly explore their options and seek advice from insurance agents and advisors.
- Know your budget. Since insurers universally view teenagers as high-risk, individual coverage almost always costs more. Consider helping your teen driver create an expense calendar to calculate prospective auto insurance costs against their income and other financial responsibilities.
- Enroll online, by phone, or in person. If your teenager feels uncomfortable purchasing a policy online, they can contract a licensed insurance agent over the phone or at their office.
The Price of Teen Driver Insurance
Teen car insurance costs depend on numerous demographic factors and whether they secure coverage independently or through their parents.
Adding a Teen Driver To Your Policy
While exact figures vary, the cost of adding a teenager to a car insurance policy generally depends on the established policyholders’ existing coverage, driving history, and credit score. While insurers usually extend coverage to teen drivers joining a family policy, they will charge exponentially more if their parents have multiple infractions and accidents on their record.
For example, if a 40-year-old father with a spotless driving record added a teenager to their policy, it could still increase their monthly premiums by more than 200%. While this rate hike may seem extreme, it still costs less than securing separate insurance policies due to bundling discounts and other savings opportunities built into family coverage.
Getting a Separate Policy
As mentioned above, purchasing separate car insurance for your children can cost significantly more than family coverage, especially for teens under 18. In states with a 16 or 17-year-old age of consent, insurance companies rank minors as particularly high-risk and withhold many discounts typically afforded to adult drivers.
The average standalone, full-coverage insurance plan for a 40-year-old male policyholder costs roughly $2,000 a year. By comparison, identical coverage for a 16-year-old driver in the same state would cost closer to $4,600. Notably, most teenage drivers will only qualify for many standard policy discounts once they accrue years of accident-free driving experience and a passable credit score.
Why Does It Cost So Much?
Insurance companies calculate costs based on their likelihood of paying claims. When it comes to auto insurance, a driver’s age, accident history, credit score, daily commute, vehicle type, and location can all swing premiums one way or the other. Because teenagers have a statistically high accident risk, they typically cost more to insure than most other age groups.
For example, drivers between the ages of 16 and 19 have a fatal accident rate three times higher than adults aged 30 to 59. Meanwhile, most insurance companies lack applicable background information on teenagers’ daily lifestyles and driving habits that would otherwise help lower their rates, such as an extensive history of safe driving and a solid credit score.
When Will the Price Decrease?
While teen car insurance costs may intimidate many families, they will decrease over time as young drivers gain experience. Typically, rates will drop around 16% when drivers turn 19. Insurance companies tend to lower rates even further once a driver turns 21, given they have avoided serious accidents and violations and begun developing a credit history.
How To Spend Less On Teen Driver Insurance
If you want to minimize costs associated with insuring a teenage driver, ask your insurer about teen-specific discounts and other policy adjustments that could help reduce costs.
Teen Driver Specific Discounts
Most insurance companies offer numerous discounts for teenagers who adhere to specific driving and lifestyle guidelines, helping reduce the high cost of teen car insurance and encouraging positive habits in young and impressionable drivers. Popular discounts include:
- Good Student Discount: Many insurers offer premium discounts as high as 25% for teenagers who maintain good grades throughout the school year. Most companies require these individuals to secure a minimum GPA of 3.0 or rank in the top 20% of their class.
- Away Student Discount: If you have a teenager on your policy, many insurers will offer 5%–35% discounts to exclude them from coverage if they attend college at least 100 miles away from home and refrain from driving. Many insurance companies will qualify the parents for the discount if the child is at school over 100 miles away without actually having to exclude them.
- Safe Driver Discount: While 10-25% safe-driver discounts apply to both teenagers and adults, most insurers require at least three years of accident and violation-free experience before they will reduce premiums.
Other Ways to Reduce the Cost
If you cannot secure a teen-oriented discount, explore these other cost-reduction alternatives:
- Name your teen as a secondary: Secondary drivers require less coverage and cost less to insure. Your secondary teen driver can use your car for practice until they own a vehicle independently or become a primary driver on your policy.
- Choose your teen’s car carefully: A sensible sedan, minivan, or SUV costs less to insure than a high-power vehicle with minimal safety features. If your family owns multiple cars, you can save money by assigning your teen the primary driver of the least expensive and safest car.
- Trim excess coverage: While almost every state requires drivers to possess minimum liability limits, you might not need additional coverages like collision or comprehensive insurance.
- Postpone licensing: While most teens are rightfully eager to drive, acting as their interim chauffeur or encouraging the use of public transportation will delay the need for additional insurance coverage.
What If My Teen Has a Learners Permit?
Securing coverage for a teenager with a learners permit ultimately depends on your state and insurance company. Some insurers allow learners to join their family plan free of charge until they get their license or turn 18, whereas others require parents to add learners to their plan and pay the full price for teen coverage. Failing to insure any teenage driver, regardless of license status, can result in legal penalties and often has dangerous repercussions.
Do All Insurers Provide Free Coverage to Permitted Drivers?
Teenagers with learners permits can only drive under the supervision of adults over 21. Therefore, some insurers allow learners to bypass coverage, believing that this adult presence diminishes the inherent risk of traffic violations and serious collisions. However, not all insurance companies adhere to the same principles. Contact your insurer in advance to secure suitable coverage and understand how it will affect your premiums.
All in All
While insuring a teen driver is mandatory in every state, the price of doing so can often feel prohibitive due to their statistically high risk of violations and fatal accidents. However, by including your children on your policy, you can use your credibility and experience to secure comparably lower costs than they could independently.
Regardless of how you insure your teenager, always compare prices and coverage discrepancies between multiple insurance companies. Likewise, ask about teen-oriented discounts for safe driving and academic achievement that could further reduce annual spending. Remember that insuring your teenager will protect their physical and financial well-being and that of other drivers sharing the road.